TORONTO (miningweekly.com) – Iron-ore junior Alderon Resources, which has a project on the Labrador-Quebec border, has already been seeing interest from Asian steelmakers which want to buy a stake in the company, CEO Mark Morabito said on Thursday.

Alderon’s Kami project lies in between mines owned by Rio Tinto, ArcelorMittal and Consolidated Thompson, which US-based Cliffs Natural Resources offered to buy for C$4,9-billion last month.

“There is no question in my mind that we will be able to conclude a deal with a Chinese or Asian steel concern once we have completed a resource update, scoping study and the metallurgical programme,” Morabito said in an interview.

“They’re already approaching us and we have had a lot of interest.”

Alderon, named after the iron-laden planet in Star Trek, completed a drilling programme last year, from which it will publish a resource statement in March at Kami, which it expects will show a deposit of 400-million to 500-million tons.

It has started a new drilling programme, from which it aims to publish updated resources of 600-million to 800-million tons in June – around the same time when it will announce the results of a scoping study.

According to Morabito, the Kami project will cost between C$500-million and C$800-million to build.

If Alderon chose to pay to use another port operators facilities (such as Cliffs or Consolidated Thompson), the capital costs would be lower and operating costs higher.

The reverse would be true if the company decided to build its own port facilities.

By the second quarter of 2012, Alderon plans to publish a feasibility study, with first production arriving by mid-2014. Output was planned at 8-million tons yearly, though Morabito said this could rise if more resources were identified.

CHINESE INTEREST

There has been bustling Chinese interest in Canadian iron-ore over the past few months, after number-three Chinese steelmaker Wuhan Iron & Steel Company (Wisco) bought a 19,2% stake in Consolidated Thompson last year, before Cliffs bid for the company.

Wisco then announced in January it would pay C$120-million for a 60% stake in a joint venture with another Canadian iron junior, Adrian Resources.

Morabito said this has sparked interest in the region from other Chinese steel companies keen on securing supplies outside the big-three producers – Vale, Rio Tinto and BHP Billiton.

“The Consolidated Thompson deal with Wisco opened up the eyes of their competitors. We’re already sharing information with some of them,” he enthused.

Alderon would sell an equity stake in the company to fund the construction of Kami, along with a debt portion that Morabito expected the potential partner to help secure.

While most queries had been from Chinese firms, Morabito said Japanese and Korean steelmakers had also shown interest.

The price of Chinese iron-ore imports rose to $188/t on Thursday – the highest level in three years, Bloomberg reported.

‘NEXT CONSOLIDATED THOMPSON’

Given that the Vancouver-based company has three former senior Consolidated Thompson bosses on its board – Stan Bharti, Bruce Humphrey and Brad Boland – and that its property is next to Consolidated Thompson’s mine, market watchers have called Alderon “the next Consolidated Thompson”.

“I don’t see why not, conditions are better for us than were for them and we’re closer to the railway line. Why would we not be in a better position than them?” said Morabito.

Alderon’s stock has more-than doubled this year to trade at C$3,70 a share at 09:57 on Friday on the TSX-V.

CONSOLIDATION

Other than the Wuhan-Consolidate Thompson deal, and the subsequent Cliffs bid, ArcelorMittal has also entered into the merger-and-acquisition fray in Canadian iron ore with its purchase of Baffinland Iron Mines for around C$590-million.

Morabito said he expects the buyouts to continue.

“I think that the iron-ore prices will remain high for seven to ten years,” he noted, adding that while there were some big projects being built he did not expect any of them to come on stream in the next eight years.

“If the majors want to increase their iron holdings, then they’re going to have to go out and buy somebody,” he said.